There are two fundamental assumptions you must make in order to compete effectively against low price competitors:
- Some people buy solely on price…but it is the smallest part of your market
- Most people buy on value
Let’s talk a minute about the value buyers. People want value for their dollar. You do. Most people you know do. If you have been an adult very long you know that the cheapest product can often be the most expensive. Your dilemma is that some products don’t lend themselves to value appreciation very well. In other words they don’t readily answer the question, “Why should I pay more?” Funerals are one of these. We do a terrible job of enabling the customer to understand both what they are getting when they pay more AND, just as important, what they are giving up. (and if you say: “we have been in business 100 years” smack yourself. They don’t care.)
So, your primary goal needs to be to enable / empower customers to differentiate on value rather than price. If you have a low price competitor who has been in business more than a couple of years AND you continue to lose calls you can be sure you are not doing this effectively. And if you don’t start then price will become the accepted and only measure.
- Be clear and explicit. Detail how you are different and those areas in which you compare favorably. Spell it out. Do it on your website. Consider a comparison chart on those things you do like: “your loved one never leaves our care.”
- Actually provide value and customer service. This is a whole lot more than words. It starts with how you answer the phone and never stops. Recently, I was visiting with a funeral staff and one of them mentioned that sometimes they get death calls from neighbors or friends of the deceased before the coroner does and they have to tell the caller they need to notify the coroner before they can respond. I asked them if they gave the caller the coroner’s phone number. They did not. I asked them if it had ever occurred to them that the caller might be under stress and would appreciate not having to look up the coroner’s number. They said that had never occurred to them. Customer service often entails thinking for the customer.
- Raise your prices. This counterintuitive move is one few funeral homes will consider but is a classic tactic. Think Mercedes and Brooks Brothers. Higher prices actually HELP you tell your story. (This assumes you have one) Higher prices automatically signal a difference and create a readiness among value minded people about how they might be better served. I have a friend who raised his direct cremation price to $5,000. He is competing with several low price companies charging close to $1,000. He is now more than 4 times higher. The result: he lost about 15% of his direct cremations but still services in excess of 150 a year. You do the math. He can now tell a more compelling story and drive up revenue and create more loyal clients
- Don’t play the game. I can see creating a low price competitor as a firewall to keep others from coming in your market but deciding to play the price game is always a downhill strategy. Focus on value, value, value. But talk about value in consumer terms. I have already mentioned “your loved one never leaves our care”. Being in business a thousand years is not consumer minded. Helping people capture memories, tell their stories and being creative is.
I’d like to hear more about the types of things we could point to on a comparison chart (like the one you’ve mentioned here) which would help describe the ways in which we add value over the average competition. Very useful food for thought, thank you.
In our region (West Coast) our cremation rate hovers around 75%. A certain segment of that market (about 30%) feel that cremation is simply a “process”. They want this “process” completed in the most convenient and economical manner. Often, they don’t even come to the funeral home because they either don’t want to or don’t have time. these are the same people who often arrange (and pay for) a gathering of some sort at their club, home or ? and spend 3-4 times as much as they paid for the “process”. I’m not convinced (at this point anyway) that this segment will ever care about the “value” we all speak of. As long as they feel they are treated with respect and charged the lowest price in the market area, they are happy. This particular segment of our market may never return to the “values” we want to relate to them.
David, I am not sure I am willing to give up on this. We have been talking past our market and, yes, some (maybe 10%) will never care but they never did. I believe our dilemma is a result of our thinking and talking in terms of activities and transactions instead of what matters to people. A few people are beginning to get traction on some very different strategies that focus instead on the emotions and relationships people DO value. Stay tuned some people will figure this out because they don’t know any better.
Alan, thanks for the insights in your article. I provide marketing for the largest funeral home in my town. We have had a competitor come into town and we have combated this in both ways by matching the simple cremation price but also by pointing out what our core differences and advantages are. Interestingly we have quoted our years in business? Also we have pointed out our clear point of difference. There has been a tangible result in the low price cremations but also we embarked on a campaign to raise the profile of my clients business. Over the past year we have seen a growth in market share but the challenge is still there. Thanks for your words they reinforce our current stance and give some food for thought.
Just saw this in a facebook post:
price is only ever an issue…in the absence of value
Thank you, Alan. While I’ve always agreed with your philosophy, this article really helped to clarify it for me. I’m the owner of Shine On Brightly, which is an online resource for memorial art. That is to say, that all of our cremation urns, guest register books, cremation and memorial jewelry, memorial textile art, memorial portraits, and grave markers are handmade by skilled artisans.
It seems as though my competition is the mass-produced cremation urns that flood the market. Yet, in reality, that’s not my competition, because we’re talking about oranges and apples. The handmade cremation urn, for example, requires a high skill level, takes time to produce, and is often personalized with specific attributes, such as color, design, inscriptions, and more. My so-called “competition” imports urns from India and China. These are mass-produced, so the time factor is shorter. They are often not made by human hands with compassion and caring added into the mix.
To me, these are two completely different types of products. Yet I still spell it out for the consumer. One thing I’ve learned about being in business is that it is up to us, as business owners, to tell our stories. That includes spelling out that which makes us unique.
Adrienne, thank you for your support. I just want my readers to know that I have no relationship with your product and do not endorse it.
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Thanks for sharing! Seems like people forget about the funeral industry. And I agree with a lot of the commenters here–most people are willing to put up a bit more for a quality service. Cremation and urn costs may fluctuate, but being able to promise potential customers value over cost will keep people coming in the doors.